AHSANULLAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

School of Business

An Assignment On
Subject: -Business Law (MBA 613) Submitted To: Barrister A. Mabud Masum

Submitted By:Choudhury Tanvir Azad ID No: 12.01.51.008

Submitted Date:-29-12-2012

Topic

Corporate Social Responsibility is a blessing to the Corporate as well to the community. Justify the statement and also comment how Corporate Social Responsibility helps in brand publication and competition in the market.

1. Introduction:
The first question that needs to be answered is what we mean by corporate social responsibility or CSR?

Corporate social responsibility can be defined as the behavior that society commonly expects of businesses in matters of public concern. [1] One view of CSR suggests that the efforts of the firms should be intended exclusively for profit making for investors. And the other view of CSR is that the manager of the firm should decide what portion of the firms profit should be utilized for specific public issues such as improvement of the education system, medical research, etc. There are two competing theories of CSR [2], they are: A) The agent of capital view: states that corporations have to take the responsibility to maximize profits while abiding by the rules of the society.

B) The social contract view: states that the society we live in has improved a lot and now should start to concentrate more on improving quality of life and begin addressing environmental concerns. The concept of corporate social responsibility is a new and modern one. CSR is a new concept apart from the occasional social beneficial services carries out by some business firms. Businesses are run by governments, labor unions and consumer groups. These powerful governing bodies consider CSR as a long-term investment in PR. In the context of Bangladesh, CSR is more applicable for the export-oriented industry. Due to globalization, CSR has become a necessary practice for the businesses in Bangladesh. CSR looks out for the benefits of all stakeholders, not just for the stockholders. In order to adapt to the process of globalization the country is sensing the necessity for practicing CSR. But the total status of application of CSR in Bangladesh is very small. Some factors that challenge the progression of CSR practices include lack of Good Governance, lack of strong labor unions or consumer rights groups, and failure of the business community to identify CSR as a pre-condition for survival in export and PR

investment local market. After learning the importance of CSR for the local business community from incidence for boycotting from the importer, there is a gradual increase in the application of CSR in Bangladesh. For the purpose of addressing the social problems or the problems of the stakeholders, the business community fashioned a new approach in their business strategies and named it CSR. And via CSR companies plan to strike a balance between economic and social goals, where the resources are consumed in a rational manner and social needs are addressed maturely. CSR can be seen as an all-inclusive set of policies, practices and programs that are incorporated into business operations, supply chains and decision making processes all the way through the business enterprise and include responsibilities for present and past actions in addition to sufficient attention to future impacts. The focus of CSR can vary from business to business and can also vary by size, sector and also by geographic region.

2. BODY
A. HISTORICAL PERSPECTIVE Of CSR

CSR is a nation in which firms incorporate communal and ecological issues in their business operations and in their interactions with their stakeholders voluntarily. It is claimed that should act both responsibly and ethically. But this goal is complex and very hard to achieve. It seems that corporations now face a battle between their movie of profit making and the ideologies of CSR. If a table of the conflicting goals of profit making and adoption of CSR ideologies is drawn, it would look like this [3] :

Profit maximization Advocates Goal Profit maximization

Social responsibility Advocates Ethical and socially Responsible behavior

Ethical Duty

Only follow ethical norms Embodied in laws

Go beyond duties imposed by laws consider interests of a wide variety of groups

Benefit

Maximization of total Economic welfare

Enhanced quality of life for all of society

The term Socially responsible means satisfying legal obligations and also taking step beyond and investing some portion of the profits into human capital, the environment and the in trustworthy relationship building with stakeholders it is applicable to all sorts of companies from MSMEs to Multinational Enterprises (MNEs). Quite a few bunches of companies with social standing and environmental records suggest that CSR activities can be the cause behind better performance and can also produce more revenue and growth. Companies that are socially responsible usually generate satisfactory financial retunes. Some internal areas of business that are influenced by CSR are: human resources management, health and safety during work, adjustment to changes and management of environmental impact and natural resources. The external areas include local communities, business, partners, suppliers and consumers, human rights and global environmental issues. CSR may include arranging a simple social services event for the community. In the context of Bangladesh, may MNc and local companies practice CSR.

B. Implications Of CSR To Business Activities

In theory, business persons are pressured to behave ethically or adopt CSR ideologies by the market mechanism and the legal system. But when we go outside and take a look into the real word, we see that both the economic and the legal system are flawed. Therefore individuals need to define what is right and wrong conduct in business
[4].

Especially in the export sector,

companies are facing the challenges of efficiency adapting to changes brought about by globalization in the environment. Here personal analytical skills and implementation of CSR ideologies would definitely help to come up with sound business decisions. Companies have slowly started to give more importance to CSR even in the local markets, even though consumer right movement, the implementation of government rules and regulations and a systematic vision regarding the economic importance of CSR are not so popular in the corporate world in Bangladesh. Firms are becoming aware of the direct economic value of CSR. CSR is not a cost, it is an investment. Therefore, by incorporating CSR, business will be able to contribute to the society and at the same time minimize risk due to uncertainty.

C. THE ROLE Of CSR IN THE DEVELOPMENT Of THE COMMUNITY

In the context of Bangladesh, CSR can contribute immensely for the development of the community. The businesses can help the community by creating jobs, thereby reducing the rate of unemployment. CSR can also provide primary education and contribute to infrastructure development such as roads and high-ways and also help highlight the environmental issues causing concern. CSR can be of immense help for developing the economy, society and the environment for a country like Bangladesh.

D. THE APPLICATIONS AND REALITIES OF CSR IN BANGLADESH

From the beginning of its inception, CSR ideologies and practices created a long history of social service activities in Bangladesh. These social service activities include donations to various charitable organizations, poor people and religious institutions. The discussions on practices of CSR ideologies are comparatively new but the CFR ideology has been around for a while. As a part of the global market, it is difficult for Bangladesh to ignore CSR standard especially in the export sector. Since the population of the CSR practices in the international business practices, CSR is becoming one of the factors which help determine market accesses. CSR is slowly becoming an integral measure for local acceptability. Proper practices of CSR ideologies will prove to be very useful for improving corporate governance, labor rights, safety in work place, and unbiased treatment of workers, community development and environment management. CSR involves working with stakeholders and it is vital to work from within and analyze the stakeholders concerns so that the ideologies of CSR become an inseparable part of the company. Now-a-days, various CSR dimensions are practiced in Bangladesh.

E. POTENTIAL BUSINESS BENEFITS

The scale and nature of the benefits of CSR for an organization can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones. Orlitzky, Schmidt, and Rynes[5] found a correlation between social/environmental performance and financial performance. However, businesses may not be looking at short-run financial returns when developing their CSR strategy. Intel employs a 5-year CSR planning cycle.[6] The definition of CSR used within an organization can vary from the strict stakeholder impacts definition used by many CSR CSR may advocates be based and within will
[7]

often

include charitable resources, business

efforts and volunteering.

the human

development or public relations departments of an organization,

or may be given a separate

unit reporting to the CEO or in some cases directly to the board. Some companies may implement CSR-type values without a clearly defined team or programmed.

The business case for CSR arguments:

[8]

within a company will likely rest on one or more of these

Human resources
A CSR program can be an aid to recruitment and retention,
[9]

particularly within the

competitive graduate student market. Potential recruits often ask about a firms CSR policy during an interview, and having a comprehensive policy can give an advantage. CSR can also help improve the perception of a company among its staff, particularly when staff can become involved through payroll giving, fundraising activities or community volunteering. CSR has been found to encourage customer orientation among frontline employees.[10]

Risk management
Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents.[11] These can also draw unwanted attention from regulators, courts, governments and media. Building a genuine culture of doing the right thing within a corporation can offset these risks.[12]

Brand differentiation
In crowded marketplaces, companies strive for a unique selling proposition that can separate them from the competition in the minds of consumers. CSR can play a role in building customer loyalty based on distinctive ethical values.[13] Several major brands, such as The Co-operative Group, The Body Shop and American Apparel[14] are built on ethical values. Business service organizations can benefit too from building a reputation for integrity and best practice.

Globalization and market forces

As corporations pursue growth through globalization, they have encountered new challenges that impose limits to their growth and potential profits. Government regulations, tariffs environmental restrictions and varying standards of what constitutes labor exploitation are

problems that can cost organizations millions of dollars. Some view ethical issues as simply a costly hindrance, while some companies use CSR methodologies as a strategic tactic to gain public support for their presence in global markets, helping them sustain a competitive advantage by using their social contributions to provide a subconscious level of advertising. (Fry, Keim, Meiners 1986, 105) Global competition places a particular pressure on multinational corporations to examine not only their own labor practices, but those of their entire supply chain, from a CSR perspective. That all government is controlling.

Laws and regulation

Another driver of CSR is the role of independent mediators, particularly the government, in ensuring that corporations are prevented from harming the broader social well, including people and the environment. CSR critics such as Robert Reich argue that governments should set the agenda for social responsibility by the way of laws and regulation that will allow a business to conduct them responsibly. The issues surrounding government regulation pose several problems. Regulation in itself is unable to cover every aspect in detail of a corporations operations. This leads to burdensome legal processes bogged down in interpretations of the law and debatable grey areas (Sacconi 2004). For example, General Electric failed to clean up the Hudson River after contaminating it with organic pollutants. The company continues to argue via the legal process on assignment of liability, while the cleanup remains stagnant. (Sullivan & Schiafo 2005). The second issue is the financial burden that regulation can place on a nations economy. This view shared by Bulkeley, who cites the Australian federal governments actions to avoid compliance with the Kyoto Protocol in 1997, on the concerns of economic loss and national interest. The Australian government took the position that signing the Kyoto Pact would have caused more significant economic losses for Australia than for any other OECD nation (Bulkeley 2001, pg 436). On the change of government following the election in November 2007, Prime Minister Kevin Rudd signed the ratification immediately after assuming office on 3 December 2007, just before the meeting of the UN Framework Convention on Climate Change. Critics of

CSR also point out those 10rganizations pay taxes to government to ensure that society and the environment are not adversely affected by business activities. Denmark has a law on CSR. On 16 December 2008, the Danish parliament adopted a bill making it mandatory for the 1100 largest Danish companies, investors and state-owned companies to include information on corporate social responsibility (CSR) in their annual financial reports. The reporting requirements became effective on 1 January 2009.[15] The required information includes:

Information on the companies policies for CSR or socially responsible investments (SRI) Information on how such policies are implemented in practice, and Information on what results have been obtained so far and managements expectations for the future with regard to CSR/SRI.

CSR/SRI is still voluntary in Denmark, but if a company has no policy on this it must state its positioning on CSR in their annual financial report.

F. THE FUTURE AND PROSPECTS OF CSR IN BANGLADESH

CSR is being practiced and implemented in Bangladesh in order to survive in the competitive and demanding, global, corporate jungle. Since Bangladesh is a developing country, we have a long way to go and have to go and have to face some challenge to properly implement CSR in Bangladesh. The purpose of practicing CSR in Bangladesh is enhancement of performance. In a article published under the title Good Governance and Market-Based Reforms: A study of Bangladesh the writers Fara Azmat and Ken Coghill tried to relate good governance with CSR by discussing good governance indicators such as regulatory quality, rule of law and control of corruption in Bangladesh and analyzing how the absence of good governance indicators affects the victory and maintenance of reforms and gives rise to the lack of business ethics and CSR in Bangladesh.

3. CONCLUSION

In spite of countries hindrance the modern ideology or concept of CSR is evolving slowly but surely. CSR is an instrumental PR investment. Sluggish progress can be attributed to lack of Good Governance, deficiency of strong labor unions, consumer forums and most of all lack of comprehension and perception by business house, particularly non-exporting ones. The driving forces behind the evolution of CSR are pressure from the various stakeholders. But at the end of the day, companies mostly benefit from the application of the concept of Corporate Social Responsibility or CSR. Corporate Social Responsibility helps in brand publication and competition in the market.

BIBLIOGRAPHY

1. Barnes, AJ, Dworkin, T.M & Richards, E. (2000). Law for business. McGrew-Hill/Irwin 2. Cameron III, G, D, & Scaeletta Jr, P J (1990). Foudation of Business law. Von Hoffman Press Inc. 3. Conry, E, J Ferrera, G, R & Fox, K, H (1986). The legal environment of business, Wm. C Publishers.. 4. Edwards, F, l, Meiners, R, E & Ringleb, AI H (1994). ). The legal environment of business, West Publishing Company. 5. Orlitzky, Marc; Frank L. Schmidt, Sara L. Rynes (2003). "Corporate Social and Financial Performance: A Meta-analysis" (PDF). Organization Studies (London: SAGE

Publications) 24 (3): 403441. doi:10.1177/0170840603024003910. Retrieved 2008-0307. 6. E. Curry, B. Guyon, C. Sheridan, and B. Donnellan, Developing an Sustainable IT Capability: Lessons From Intels Journey, MIS Quarterly Executive, vol. 11, no. 2, pp. 6174, 2012. 7. "Corporate Social Responsibility and Ethical Careers". University of Edinburgh Careers Service. Retrieved 2008-03-07. 8. Bhattacharya, CB, Sankar Sen and Daniel Korschun (2011) Leveraging Corporate Social Responsibility: The Stakeholder Route to Business and Societal Value, Cambridge University Press, Cambridge: UK. 9. Bhattacharya, C.B., Sankar Sen and Daniel Korschun (2008), "Using Corporate Social Responsibility to Win the War for Talent," MIT Sloan Management Review, 49 (2), 3744; "The Good Company". The Economist. 2005-01-20. Retrieved 2008-03-07. 10. Korschun, Daniel, C.B. Bhattacharya and Scott Swain (2011), When and How Does Corporate Social Responsibility Encourage Customer Orientation? Working Paper. |url=http://www.esmt.org/en/310145

11. Eisingerich, A.B.; Ghardwaj, G. (2011). "Corporate Social Responsibility: Does Social Responsibility Help Protect a Company's Reputation?". MIT Sloan Management Review 52 (March): 1818. 12. Kytle, Beth; paramveer singh (2005). "Corporate Social Responsibility as Risk Management: A Model for Multinationals" (PDF). Social Responsibility Initiative Working Paper No. 10.. Cambridge, MA: John F. Kennedy School of Government, Harvard University. Retrieved 2008-03-07. 13. Paluszek, John (April 67, 2005). "Ethics and and Brand Value: Ethics Strategic Partnership

Differentiation"(PowerPoint). Business

Organizational

Meeting. Markkula Center for Applied Ethics, Santa Clara University. Retrieved 200803-07. 14. "Dr. Tantillos 30-Second 'How To': How To Brand CSR The American Apparel Way"Marketing Doctor Blog. March 28, 2008. 15. Danish Centre for CSR's official website CSRgov.dk